Externalities of Education on Efficiency and Production Uncertainty of Maize in Rural Malawi

The paper looks at the existence, nature and form of intrahousehold and interhousehold externalities of education on efficiency and production uncertainty of maize in rural Malawi. Data from the Third Integrated Household Survey are used. I find statistically and economically significant positive intrahousehold and interhousehold externalities of education on both efficiency and production uncertainty, and that the intrahousehold externality effects are larger than interhousehold externality effects. Community level schooling is found to substitute for household level schooling in the sense that farmers who reside in households where members are not educated have relatively higher efficiency and lower production uncertainty on account of living in communities where some inhabitants are educated. The paper also finds that the intrahousehold and interhousehold externality effects are more pronounced for the least efficient farmers, and that they are monotonic, and largest when schooling is relatively low.